EMarketer Reduces Projection for Twitter Ad Revenue in 2016

Elections And Summer Olympics Expected to be Pivotal Moments

Twitter ad revenue will grow 30.8% this year, according to eMarketer, but that's less than the research company previously projected. Credit: Michael Nagle/Bloomberg

EMarketer has lowered its growth projections for Twitter's ad revenue amid slowing user growth, the research company said.

The micro-blogging site is likely to generate about $2.6 billion in worldwide ad revenue in 2016, up 30.8%, eMarketer said in a report Thursday. The research company previously predicted Twitter's global ad revenue would reach $2.95 billion this year.

EMarketer said emerging platforms like Snapchat, Instagram and messaging apps are chewing away at Twitter's ability to attract more users.

"Growth in usage of Twitter's core service has all but stalled in recent quarters," said Debra Williamson, social media marketing analyst at eMarketer. "Until the company can show that its efforts to restart the growth engine are working, we will stay on the conservative side when it comes to forecasting Twitter usage."

"EMarketer has decreased its estimates of the number of US Twitter users ages 12 to 24 and 65 and older in the US based on new data," it said in its report. "As a result, the total number of Twitter users has also been adjusted downward."

Still, Twitter's user base is expected to grow by about 8% this year, faster than the larger Facebook, and should continue to outpace Facebook through 2018, eMarketer said.

The report added that nearly 90% of Twitter's revenue will come from mobile this year. "We have yet to see material monetization of logged-out users," said eMarketer senior forecasting analyst Martín Utreras. "Events like the US election and summer Olympics this year may prove pivotal to the success of this strategy."

A Twitter spokesman declined to comment.

Twitter has a worldwide net digital ad revenue share of about 1.4%, compared with 30.9% for Google and 12.0% for Facebook, eMarketer said.